Stat of the Week: $38.08 Per Square Foot
At $83.54 per square foot, Midtown Class A overall average asking rents are 2.3 percent higher than three months ago. This average asking rent includes 40 buildings that stand out above the rest, and these trophy assets have the highest asking rents in Midtown. Through the first quarter, the Midtown trophy set averaged $121.62 per square foot, a $38.08 premium over the Midtown Class A average. Trophy asking rents jumped 6.2 percent higher and outpaced Midtown Class A gains of only 3.2 percent in the past year. The first quarter also marked the largest spread between trophy asking rents and Midtown Class A asking rents in the last 30 quarters (or seven and a half years). Midtown Class A asking rents are still 9.8 percent lower than the previous historical highs in 2008, while trophy asking rents are only 6.9 percent off of the mark.
Trophy net effective rents are significantly higher than Midtown Class A as well. Through the first quarter of 2016, net effective rents for trophy assets averaged $107.13 per square foot, a $41.64 premium over the Midtown Class A average. This premium is 95.1 percent higher than the historical $21.34 per square foot average spread between the trophy set and Midtown Class A net effective rents.
Higher asking rents are not the only reason a building is in the Midtown trophy set. Demand for these buildings is high as well, as the current vacancy rate of 8.6 percent is 110 basis points lower than the Midtown Class A vacancy rate of 9.7 percent. Over the past five quarters, trophy assets had an average vacancy rate of 7.9 percent, which actually jumped in the first quarter due to 307,884 square feet added to the market at 65 East 55th Street. During this time, vacancy in the trophy set averaged 170 basis points lower than Midtown Class A. With all of these significant differences, it’s clear that trophy assets are certainly the winning prize, towering over Class A Midtown space in every aspect.